LONDON: British government bond prices fell sharply after data showed that the US economy created many more jobs than expected, extending the week's heavy losses and taking five-year gilt yields to their highest in more than a month.
The robust US payrolls figures -- which included sizeable upward revisions to previous months' data -- go some way to ease concerns about the health of the global economy, which took 10-year gilt yields to a record low last week.
March gilt futures turned tail and shed 70 ticks on the data, while five-year gilt yields peaked at 1.103 percent at 1336 GMT, more than 5 basis points up on the day and their highest level since Jan. 5.
"The job market data leave the door wide open for a first hike in (US) interest rates in the summer," said Chris Williamson, chief economist at financial data provider Markit.
At the end of last week, financial markets had not priced in a first interest rate rise by the Bank of England until around September 2016, but they have been bringing expectations forward this week as British purchasing managers' data came in better than expected.
Next week the BoE publishes a quarterly forecast update, and many economists -- who were already sceptical of such late market pricing for a BoE move -- expect it to revise up growth forecasts and hint at an earlier rate move.
Ten-year gilt yields peaked 5 basis points up on the day at 1.60 percent, their highest level since Jan. 12, while June 2016 short sterling interest rate futures tumbled 6 ticks as markets priced in higher British interest rates.
A week earlier, the 10-year yield hit a record low of 1.337 percent on the back of tumbling oil prices and fears of a debt default by Greece's newly elected leftwing government.
Comments
Comments are closed for this article.